Money Monday: Foreign Investments that Pay

Luxury Parisian shopfront with fashion accessories in boutique window display
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As opposed to dropping a grand on Louis Vuitton . . .

We currently live in an environment in which brand name items, fashion and trends are the order of the day. In this post-pandemic economy we are experiencing more spending, shopping and a higher demand for brand name items than ever, irrespective of the price it would seem.

Sure there is inflation, and an alleged projected recession coming, but people are still out-bidding each other for houses, and paying above the market rate or sellers asking price. There is no shortage of Louis Vuitton, Tom Ford and beauty products such as MAC and Le Mar flying off the shelf.

The question in today’s Money Monday is how can you cash in on these trends?

A Tale of Two Cities

When the economy goes south and things get tight, the people in the middle class are usually experiencing financial hardships, meanwhile the rich and wealthy are thriving. Therefore in this type of economy, we witness the traffic in high end stores, the swift sales in luxury items, and even discount stores profiting from the middle class going bargain hunting. This presents investment opportunities for savvy investors like you to consider and cash in on deals.

American Depositary Receipts

Many of you have some idea of stocks and bonds, security deposits, Individual Retirement Accounts and other types of investment tools. Are you also aware of American Depositary Receipts (ADR)? An American Depositary Receipt is basically a security, stock or certificate representing a share, a number of shares or a percentage of a share or stock in a foreign company. With ADRs you are essentially investing in, and owning a foreign company’s stock. The investment amount is valued in United States currency, and issued by U.S. banks.

Foreign companies’ stocks are also traded on the United States Stock Exchange, as well as NASDAQ, which is an online world wide electronic system where securities not traded on the New York Stock Exchange may be found.

What you need to know about ADRs are that they are similar to stocks since they are traded over the counter and you can track their performance reviewing the data before you invest a few bucks.  ADRs can provide more diversification to your investments since they are international companies, but ADRs are issued at different levels and come with currency risk. There is the risk that the exchange rate in the company’s domicile (home base) could change and affect your investment. The other critical factor is that your dividends, or capital gains from investing a few bucks, may be may be subject to taxation from our friends at the Internal Revenue Service, as well as in the foreign country.

There are workarounds to addresses those issue and not pay double taxes, however.  And, these still make it a worthwhile stock investment opportunity after you have completed your research and spoken with your financial advisor, accountant and others.

You Have Invested

Whether you want to accept it or not, you have already invested in these foreign companies, if you take inventory in your closet. While the company name Kering may not mean anything to you at first mention, they are one of the main Paris-based fashion companies in the world, making brands such as Gucci, Alexander McQueen and Saint Laurent. Don’t tell me you have never purchased any of those brands! If you have never owned or purchased any of those brands, how about the LVMH Group? The LVHM Group is a Paris-based high-end luxury group whose holdings includes Louis Vittion, Sephora, Tiffany & Co., Marc Jacobs, Christian Dior and Fendi. Don’t you own something by Louis Vuitton?

Why not consider an investment which pays? Let’s just keep it real! You already own Apple, Nike,Chanel, Adidas, Zara, H&M and Gucci products. But if high end store investments are not your thing, have you bought stocks in bargain hunting stores such as Walmart, Costco or Ross Stores?

WHAT’S UP!

Today’s What’s Up is about how to identify fake reviews before you purchase an item. Good stewards will examine reviews prior to spending on a particular item. But how do you know that the reviews are authentic? Here are two ways. Look for the date stamp on the reviews. If all the positive reviews are posted on the same date, then you know something may not be legitimate. The second clue is if the wording on the reviews are very similar, then you know those reviews may be fake. Well! Happy shopping and spend wisely-And that’s what’s up!

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